ozzie (99.90)

Watch the Money Market Balances

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WAY under the radar was a story last week that reported Money Market balances hit a record $3.5 Trillion (yes, with a "T") last week. That's before the various stock selloffs this week. To give you some frame of reference, this amount could buy the Top 20 U.S. Companies (based on Market Cap: http://www.theonlineinvestor.com/large_caps/) and STILL have $700 Billion left over to play around with.

Why is this important. Well, it is possible that the world is NOT coming to an end. I know all signs point to Armageddon, but what if life goes on? At some point, people will get tired of earning less than 1% in their "Safe" money market accounts and decide that buying shares in U.S. companies makes more sense. What happens when even a small portion of that balance (let's say $1 Trillion or so) begins pouring back into the market? Well, let's just say Supply and Demand is a law like gravity that cannot be broken.

How much longer will people continue to move their remaining assets at "fire sale" prices to money market accounts? I couldn't tell you - people's ability to remain irrational far exceed my ability to stay solvent, I'm afraid - but record Money Market balances do seem to point to capitulation.

Happy Investing! I like COP, MEE and GE - these will do well if the world doesn't end.

I am 75% in cash. I have it in a MM and am getting 4%. I will never get tired of that yield as long as the market continues to fall out of bed. I started to move my money in 2006, shifting my exposure and I am very glad that I did.